TaxTMI 
TaxTMI 
2017 (9) TMI 2053
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.... by the learned Single Judge, it would be necessary to avert to certain essential facts :- (2) The Reserve Bank of India, (RBI) constituted under the Reserve Bank of India Act, 1934 invited tenders for construction of eighty Class III Quarters and one hundred and twelve Class IV Quarters and a Community Hall at Kharghar, Navi Mumbai. The appellant (hereinafter referred to as the "claimant") is a Private Limited Company engaged in the business of construction submitted its offer which was accepted by the RBI being the lowest and the letter of acceptance was issued to the claimant on 25th June, 1993. An Agreement was signed between the parties on 14th September, 1993 in which the date of commencement was specified as 5th July, 1093 and the period of completion was fixed as 20 months. The total value of work awarded was Rs. 4,89,94,854/ -. (3) Though the date of completion was specified as 5th July, 1993, the conditional extension was regularly granted and time for completion of the project was finally extended till 31st January, 1997. The virtual completion certificate was granted on 31st March, 1997. The claimant raised final bill in regard to the work carried out by them on 4....
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....s how the present appeal is before us. (6) We have extensively heard Advocate Shri Sarosh Bharucha a/with N.C. Parekh and Sunil Vyas i/by Mansukhlal Hiralal & Co. for the Appellant and Advocate Shri. Phiroz Palkhiwala a/with Debojit Banerjee i/by Udwadia & Udeshi for the Respondent. (7) Advocate Shri Sarosh Bharucha appearing for the appellant argued in extenso that the order passed by the learned Single Judge does not fall within the purview of Section 34 of the Arbitration Act and the learned Single Judge could not have substituted the view of the Arbitrator unless and until he recorded a finding of perversity. It is argued by him that the learned Arbitrator's finding that after considering the facts of the case, terms of the contract and evidence on record there was no accord and satisfaction, has been substituted by the learned Single Judge on the ground that the Arbitrator's finding was based on no evidence which is ex facie perverse and contrary to the evidence on record. Further it is also argued by Mr. Bharucha that the finding of the learned Single Judge that the appellant did not demonstrate any case of "financial hardship" on count of delay in release of pa....
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....was open for the respondents to challenge the impugned order to that extent and having failed to do so the respondents are precluded from raising the said grounds in the appeal which is filed by the appellant. (8) As against the claim of the appellant, learned Counsel Shri Palkhiwala appeared on behalf of the respondents and argued the matter at length. He placed reliance on the judgment of the Hon'ble Apex Court demonstrating the powers of the Court to interfere with and setting aside an arbitral award under section 34 of the Arbitration Act and by placing heavy reliance upon the judgment of the Apex Court in Oil & Natural Gas Corporation [2003 (5) SCC 705] Vs. Saw Pipes Ltd, he argued that an award can be set aside if it is in contravention of the provisions of the Act or any other substantive law governing the parties and is contrary to the fundamental policy of the Indian Law. He relied upon the judgment of the Apex Court in the case of Delhi Development Authority [2008 (13_ SCC 80] Vs. R.S. Sharma & Co. and according to the learned counsel the following grounds permit interference in an arbitral award :- (a) An award which is contrary to the substantive provisi....
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....mes to an end and there is no scope for arbitration. i. Union of India v Ajit Mehta and Associates: AIR 1990 Bombay 45. ii. P. K. Ramaiah and Co. v Chairman and Managing Director, National Thermal Power Corporation: 1994 Supp (3) SCC 126. iii. Nathani Steels Ltd V Associated Constructions: 1995 Supp (3) SCC 324. iv. National Insurance Company Limited V M/s Boghara Polyfab Pvt Ltd .: AIR 2009 Supreme Court 170. v. Cauvery Coffee Traders, Mangalore v Hornor Resources (International) Company Limited: (2011) 10 SCC 420. Union of India and Others v Master Construction Company: (2011) 12 SCC 349. vi. Cauvery Coffee Traders, Mangalore v Hornor Resources (International) Company Limited: (2011) 10 SCC 420. vi. Union of India and Others v Master Construction Company: (2011) 12 SCC 349. vii. New India Assurance Company Limited v Genus Power Infrastructure Ltd: (2015) 2 SCC 424. (11) Shri Palkhiwala also strenuously attempted to demonstrate that the Arbitrator has chosen to ignore all the relevant and germane arguments put forth by the respondent to the effect that no evidence was led to prove alleged coercion or financ....
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....udge though on a limited ground found that the award to be not sustainable and has set aside the award and whether it is permissible for this Court to deal with all his arguments. The learned counsel argued that the Court is exercising the appellate power conferred under section 37 of the Arbitration Act and the said section do not in any manner expressly or by necessary implication restrict the power of the Appellate Court. According to the learned counsel, provisions of section 107 of the Code of Civil Procedure will apply fully even to appeals under section 37 of the Arbitration Act and the this Court is required to consider all aspects and contentions to arrive at its conclusion, whether or not the impugned award is required to be set aside. (13) We have carefully considered the submissions advanced on behalf of both the parties and also perused the judgment of the learned Single Judge dated 30th August, 2004. It is not in dispute that the contract was entered into between the claimant and the RBI in pursuance of acceptance of a bid by the former for the construction of residential quarters and Community hall for the later at Belapur with an estimated cost of Rs.483.64 lakhs....
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....s in the phased manner. On 1st May, 1998 the final bill was submitted by the appellant and on 14th July, 1998 ad- hoc payment of Rs. 17,57,471/- was made by the respondent to the appellant. On 16th July, 1998 the respondent noted serious lapse on the part of the appellant in failing to furnish the water proof guarantee. On 30th September, 1997 the RBI recorded that there is a delay on the part of the contractor for rectification, taking measurement and handing over of the premises and in the same letter it asked the contractor to depute their representative to discuss and finalize the final bill on 9th October, 1998 the meeting took place for discussion of the final bill to be cleared pending rectification with an assurance that the rectification would be completed before settlement of final bill failing which the respondent could retain a reasonable amount from the final bill towards rectification of defects. It was on 9th October, 1998 the final bill was certified for payment by the Architect. On 16th October, 1998 the respondent paid the balance 50% of the retention money to the appellant. We have noted that on 28th November, 1998 the appellant unequivocally accepted the amount ....
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....zed within reasonable time and normally the final bill should have been paid within six months' time. The Arbitrator also observed that the respondent could have on its own prepared the final bill after giving notice to the claimant and there is a practice that the payment was actually released as latest on 31.12.1998. The arbitrator did not accept the contention of the respondent in respect of "accord and satisfaction" and concluded that looking to the chronology of the events the amount of final bill involved in releasing retention bill and also bill as PVA one would think that the claimant were under pressure so far as getting their legitimate dues are concerned. The arbitrator therefore agreed with the claim of the claimant that "no claim certificate" was procured as delay in payment was causing financial hardship to the claimant and in the circumstances, if the claimants have accepted the final bill without murmur, it is not necessary that it is by way of accord and satisfaction. The learned Single Judge has rightly dislodged the conclusion of the arbitrator on the said point. The learned Counsel for the respondent has rightly relied upon the judgment of the Apex Court in ....
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....evidence is adduced to demonstrate the financial hardship and it is very apparent that the said plea is merely an after thought to counter the case of the respondent of reaching accord and satisfaction. The learned Single Judge has rightly recorded in paragraph 6 of the judgment that the requirement of giving particulars of coercion is a basic requirement of compliance and no particulars whatsoever of alleged financial hardship or coercion are given. The learned Single Judge has also observed that what circumstance can operate as coercion in relation to one person may not so operate in relation to another person and it was for the respondent to give particulars of the alleged financial hardship and coercion and in the absence of the same being pleaded or proved, mere delay in preparation of final bill will not itself amount to financial hardship or coercion. The learned Single Judge has therefore proceeded to conclude that the findings recorded by the arbitral tribunal was based on no evidence and therefore has rightly set aside the same. (16) As regards the contention of the respondent that there was no arbitrable dispute which called for the reference to arbitration, since the....
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....re there were bilateral negotiated settlements of pending disputes, such settlements having been reduced to writing either in the presence of witnesses or otherwise. P.K. Ramaiah is a case where the contract was performed and there was a full and final settlement and satisfaction resulting in discharge of the contract. It also falls under this category. The cases relied on by the respondent fall under a different category where the court found some substance in the contention of the claimants that `no due/claim certificates', or `full and final settlement Discharge Vouchers' were insisted and taken (either in a printed format or otherwise) as a condition precedent for release of the admitted dues. Alternatively, they were cases where full and final discharge was alleged, but there were no documents confirming such discharge. Consequently, this Court held that the disputes were arbitrable. None of the three cases relied on by the appellant lay down a proposition that mere execution of a full and final settlement receipt or a discharge voucher is a bar to arbitration, even when the validity thereof is challenged by the claimant on the ground of fraud, coercion or undue influe....
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.... earlier judgment in the case of Board of Trustees for the Port of Calcutta [(1996) 1 SCC 516] Vs. Engineers-DE- SPACE-AGE and Bharat Drilling & Foundation Treatment Pvt Ltd. [(2009) 16 SCC 705] Vs. State of Jharkhand & Ors. cited supra. "Clause 1.21.4 reads as under : No claim shall be entertained for delays in communicating decision drawing or specifications by the Department. The Department may however consider the grant of extension of time in completion of work. If there is any such genuine reason of it." The principle of law discernable from the aforesaid judgment reveals to us that it is for the arbitrator to decide the effect of the said clause and deal with the issue. Per contra, Shri Palkhiwala had relied upon the judgment of the Apex Court in the case of Associated Engineering Co. [(91) 4 SCC 93] Vs. Government of Andhra Pradesh and Ramnath International Construction (P) Ltd. [(2007) 2 SCC 453] Vs. Union of India, wherein the Apex Court has held that any derogation from terms of contract is not sustainable and award of damages ignoring the terms of contract amounted to legal misconduct on the part of Arbitrator. In the present case, clause 18 reads as foll....